Energy costs forming 10% of the picture rose by 0.8% in September for the biggest gain since June. Fuel and utility costs within the housing component increased by 0.7% helping boost housing inflation by 0.3%. Food and beverage costs were unchanged last month for the lowest reading since falling back in May. Food and beverage costs are 1.45 above year ago levels.

Consumers faced weaker prices for apparel (+0.5%) and recreation (-0.1%) last month. Transportation costs making-up 17% of the overall index rose by 0.4% to stand 1.6% below year ago levels and following a monthly dip in August. Commodity prices rose by just 0.1% in September.

"The Fed is meeting today and they have it in their press statement that too-low inflation is a worry," says Chris Rupkey, managing director and chief financial economist at Bank of Tokyo-Mitsubishi UFJ. "They seem to think the output gap, large numbers of unemployed resources like people, means less demand in the economy which can allow deflationary forces to gather. There is probably something other than weak demand holding down inflation. The recession ended five years ago. Anyway, the Fed wants to see 2% inflation, a Harvard professor wants to see 6%, and core CPI is 1.7%, pretty close to 2% in our book, even if the core PCE deflator, the Fed’s inflation measure, is just 1.2%. Maybe the Fed should go back to CPI as their preferred measure if they want to see some inflation."